This is a pretty dangerous question to ask.
Why?
Well, I could ask 100 people if they thought their health insurance was “unaffordable” or too expensive and 99 would say yes.
I was going to say 100 but I'm feeling uncharacteristically optimistic today.
Understanding the "affordability" of your health insurance is a fairly relative process if you've never had to buy it for yourself. Your employers contribution will greatly skew the results of knowing what the real price of health insurance.
Why is this question important/dangerous?
I'm glad you asked.
You might have heard of this little law that was passed called the Affordable Care Act, you might know it by its street name “Obamacare.”
This law does a lot of things to reform, change and complicate health insurance protocol in our great country.
One of the biggest changes, outside of the exiling of pre-existing conditions, is the “mandate” stating everyone in the country needs to have “affordable” health insurance, or else.
That or else comes in the form of a tax penalty, but the word we are going to be focusing on for the rest of our little discussion is affordable or unaffordable and how they are defined under the new law.
What's Considered Unaffordable Then?
The cost of YOUR health insurance (not your entire family, VERY important) needs to account for more than 9.5 percent of the annual household income and needs to be based on the least expensive option offered.
OR
Your employer's health insurance covers less than 60 percent of your medical expenses, on average, leaving you with 40 percent or more.
Can You Translate That?
No problem, it would be my pleasure.
The first part of this whole unaffordability quest means you need to look at the cheapest health insurance option your employer offers and figure out if YOUR share of the cost is more than 9.5 percent of the annual income.
It's very important to only look at your cost, the employee, because often times companies pay a lot less for your spouse and kids than you and that reduction in cost sharing is not part of unaffordable determination.
The second part very simply means your plan is barely health insurance and is essentially no good. I could go into fancy insurance detail and toss words around like actuarially value but I would like you to remain conscious for the rest of the article.
What Can You Do If Your Health Insurance IS Unaffordable?
You're asking so many good questions.
You can tell your boss to take his health insurance out back, put it in a pile of very dry twigs, carelessly spill some kind of flame accelerant on it and accidentally expose it to an open flame.
But before you do that...
Let's make sure you don't start a forest fire and get your foot stuck so far in your mouth (joke)
Now would be a good time to find out if you actually qualify for “Obamacare” and if there is greener grass somewhere.
That means your income would need to fall between 138 and 400 percent of the federal poverty line, or FPL as the cool kids call it.
Don't worry I've got something already put together to help you figure out where your income falls on that scale and more importantly how much money the government will give you if it does.
If this ends up working out, go a head and light the match.
If not, you would still have to option to buy your own family plan outright without any financial help from Uncle Sam, but you will want to find out if that is a good idea or not.
What If You Want To Be A Rebel?
If you're thinking about turning your back on society and walk away from it all, the government will come call at the end of the year to collect a 1 percent tax on your total household income for flying free in the wind and going uninsured the whole year.
If your family makes $60,000 that would be a $600 fine for being uninsured for 12 months.
The Bottom Line
Health insurance is expensive. Medical treatment is expensive. What your employer charges you for health insurance is expensive.
All thought expenses don't necessarily add up to be unaffordable.
Make sure you do your math homework (don't forget to show your work) before blindly assuming your family's health insurance is too expensive.
